Accounting and Money for Ministerial Leadership. Nimi Wariboko

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      Statement of Revenue and Expenses (Income Statement)

      Tithes and offerings of a church are considered as its revenues. This is not all. Churches also earn interest income and dividends from their investments. They also receive donations and contributions. Some churches that have rental properties earn revenues from them. Expenses of a church include wages and salaries, utility bills, bank charges, interest expenses, insurance payments, offices supplies, and so on that help it to operate. Revenues less expenses represent the “net income” in corporate accounting language. Revenue – Expenses = Net Income (or Net Loss).

      Statement of Cash Flows

      This statement indicates cash generated by the operating, investing, and financial activities of the church. It records the sources of cash and the their destinations during a given period. It gives you a measure of the liquidity of the church.

      We stated earlier that accounting works with an equation, Assets = Equities (owners’ equity + liabilities). The balance sheet (statement of financial position) is where this is amply demonstrated. The income statement explains changes in owners’ equity (or net asset) by showing movements in revenues and expenses. The statement of cash flows explains the changes in the cash and cash equivalents in the balance sheet in a given period of time.

      Fund Accounting

      This statement shows the sources of fund of the church and how it was used to achieve its goals and objectives. Usually a separate chart of accounts is maintained for each of the funds of the church. The report is designed not to show the profitability of the church, but to highlight accountability.

      Auditor’s or Accountant’s Report

      It is often surprising how many people ignore the Accountant’s Report. It should be the first thing to check, to see how well the church has followed generally accepted accounting principles (GAAP) in preparing the report. The auditor’s opinion, if there is one, should also be read whether it is clean or otherwise. The auditor’s opinion does not assure that the numbers in the Annual Report are 100 percent correct, but at least it is comforting to know that somebody has taken a look at them before you and there are no material errors.

      Footnotes

      The footnotes are very important. Accountants often tuck away important information in the fine print in the footnotes. Read everything. To be able to give a reasonable verdict on the quality of a church’s financial statements and indeed its economic health, you have to comb the footnotes.

      This concludes our brisk survey of the Annual Report. But remember, this book is not aimed at making you an expert on the understanding and interpretation of financial statements. You are not an expert yet; so do not fire your church accountant or treasurer.

      Sample Balance of Andover Hill Church

      Andover-Newton Hill Church

      Balance Sheet

      May 31, 2013

      As you might have noticed, the numeraire or the “programming language” of accounting is all about money. It is the preferred method of recording information about a church’s or corporation’s activities. The structure of the flows of economic resources manifests itself to us only as dollar signs. Money is the key to the structure of existence of a corporation, and even its manifest potentials and latent possibilities. For a resource to be at all and be manifest to the reader of accounting it must be monetized.

      In the world of accounting we have assets and liabilities, which are recorded in ledgers and journals. The entries in the ledgers and journals presuppose dollar values, economic worth. The values presuppose numbers (exchange ratios). Accountants see money as mere numbers. There is a whole pattern: numbers, ledgers, things. Money is a relation between things. But this is not the only way to understand money—at least for pastors and theologians who do not want to take mathematics as the model according to which we can measure relations between human beings. Thus, it is germane to take a moment to grapple with an alternative conception of money.

      What is Money?

Neoclassical (mainstream) economists have a simple definition of money, in spite of their ever-raging debates about how to measure and account for fluctuations in the demand and supply of money and how to specify the appropriate quantity of money an economy needs to generate and sustain inflation-free full employment. Money is any convenient commodity (good, paper, thing, etc.) that serves the following functions: acts as a medium of exchange, a unit of account, a store of value, and a standard of deferred payment.16 This is a very functionalist definition of money—for money is what СКАЧАТЬ